PUBLICATION OF RESULTS. CEMIG REPORTS NET INCOME OF R$ BILLION in 1Q15

Transcription

1 PUBLICATION OF RESULTS REPORTS NET INCOME OF R$ BILLION in 1Q15 Highlights 1Q15 Cash flow as measured by Ebitda: (IFRS) 1Q15 Net revenue: 1Q15 Equity gain in subsidiaries: Gain on Aliança stockholding reorganization: R$ 2.6billion R$ 5.8 billion. R$ 90 million R$ 735 million Indicators (GWh) 03/31/ /31/2014 Change % Electricity sold, GWh (excluding CCEE) 15,782 15,827 (0.28) Indicators - R$ /31/ /31/2014 Change % Sales on CCEE 1,010,932 1,326,907 (23.81) Gross revenue 7,941,700 6,043, Net revenue 5,849,279 4,710, Ebitda (IFRS) 2,578,893 2,108, Net income in the quarter 1,484,627 1,250, Net income adjusted for non-recurring items* 911,445 1,338,265 (31.89) * Adjustment for non-recurring items: see Page 9

2 Conference call Publication of 1Q15 results Video webcast and conference call May 19, 2015 (Tuesday), at 2 PM Brasília time This transmission on Cemig s results will have simultaneous translation into English and can be seen in real time by Video Webcast, at or heard by conference call on: (11) (option 1) or + 55 (11) (option 2) Password: Playback of Video Webcast: Site: Click on the banner and download. Available for 90 days Conference call Playback: Tel: (11) Password: Português Available from May 19 to June 2, 2015 Cemig Investor Relations ri@cemig.com.br Tel (+55-31) Fax (+55-31) Cemig s Executive Investor Relations Team Chief Finance and Investor Relations Officer Fabiano Maia Pereira General Manager, Investor Relations Antonio Carlos Vélez Braga Manager, Investor Market Robson Laranjo

3 Contents CONFERENCE CALL... 1 INVESTOR RELATIONS... 1 S EXECUTIVE INVESTOR RELATIONS TEAM... 1 DISCLAIMER... 3 FROM THE CEO AND CFO Q15: ITS IMPACTS ON BRAZIL S ELECTRICITY SECTOR... 5 STOCK PRICES... 6 S LONG-TERM RATINGS... 6 ADOPTION OF IFRS... 7 S ELECTRICITY MARKET... 9 THE ELECTRICITY MARKET OF D THE ELECTRICITY MARKET OF GT PHYSICAL TOTALS OF TRANSPORT AND DISTRIBUTION MWH QUALITY INDICATORS SAIDI AND SAIFI CONSOLIDATED OPERATIONAL REVENUE TAXES AND CHARGES APPLIED TO REVENUE OPERATIONAL COSTS AND EXPENSES EQUITY GAIN (LOSS) IN SUBSIDIARIES GAIN ON FAIR VALUE IN A STOCKHOLDING REORGANIZATION FINANCIAL REVENUE (EXPENSES) INCOME TAX AND SOCIAL CONTRIBUTION TAX REGULATORY ASSETS AND LIABILITIES EBITDA DEBT DIVIDENDS THE GROUP S PORTFOLIO OF GENERATION ASSETS FINANCIAL STATEMENTS SEPARATED BY COMPANY AND BY OPERATIONAL SEGMENT GENERATING PLANTS APPENDICES

4 Disclaimer Certain statements and estimates in this material may represent expectations about future events or results, which are subject to risks and uncertainties that may be known or unknown. There is no guarantee that the events or results will take place as referred to in these expectations. These expectations are based on the present assumptions and analyses from the point of view of our management, in accordance with their experience and other factors such as the macroeconomic environment, market conditions in the electricity sector, and expected future results, many of which are not under Cemig s control. 3 Important factors that could lead to significant differences between actual results and the projections about future events or results include Cemig s business strategy, Brazilian and international economic conditions, technology, Cemig s financial strategy, changes in the electricity sector, hydrological conditions, conditions in the financial and energy markets, uncertainty on our results from future operations, plans and objectives, and other factors. Due to these and other factors, Cemig s results may differ significantly from those indicated in or implied by such statements. The information and opinions herein should not be understood as a recommendation to potential investors, and no investment decision should be based on the veracity, currentness or completeness of this information or these opinions. None of Cemig s professionals nor any of their related parties or representatives shall have any liability for any losses that may result from use of the content of this material. To evaluate the risks and uncertainties as they relate to Cemig, and to obtain additional information about factors that could originate different results from those estimated by Cemig, please consult the section on Risk Factors included in the Reference Form filed with the Brazilian Securities Commission CVM and in the 20-F form filed with the U.S. Securities and Exchange Commission SEC.

5 From the CEO and CFO Cemig s CEO, Mr. Mauro Borges Lemos, comments as follows: Cemig s figures for the first quarter of 2015 reflect the Company s efforts in seeking maximization of financial results in a scenario that continues to be challenging for the Company due to the adversities imposed by the country s water shortages. We continue to be focused on maximization of earnings, always seeking profitable projects. An example our winning bid in the auction to operate the Itaocara hydroelectric plant. Acquisition of that project is in line with our mission statement: To operate in the electricity sector with profitability, quality and social responsibility, and seek to build and consolidate a position as market leader in Brazil s electricity sector. Another example is the structuring of Aliança Geração de Energia, which increases our potential for generation of new business, combining the experience of two companies in operational, financial and project management. 4 Cemig s CFO Mr. Fabiano Maia Pereira comments: On instructions from the Board of Directors, we are monitoring all the principal economic and financial indicators, aiming for sustainability of our business and the Company s financial health. Ebitda an indicator of cash flow was R$ 2.6 billion, 22.31% more than in first quarter In the context of the new outlook for Brazil s economy and electricity sector, our balance sheet has sufficient solidity to ensure continuity of the Company s projects executed in accordance with the Long-term Strategic Plan.

6 1Q15: its impacts on Brazil s electricity sector In 1Q15 Brazil was going through what is being referred to as the hydrological crisis arousing significant concerns for both supply of water and generation of electricity. At the majority of locations in Brazil, water reservoirs operated at low capacity due to the shortage of rainfall. The consequences of these factors were reflected in the price of electricity, in its consumption and in the financial situation of companies in the electricity sector. 5 Aneel s 18th Adjustment Auction took place in January The purpose of Adjustment Auctions is to adapt the contracting of electricity by the distributors to differences arising from divergence between the future projections made by the distributors in previous auctions and the actual performance of the market in the current year. The average price negotiated for electricity in this auction was R$ per MWh. Prices varied between R$ and R$ /MWh. Cemig Distribution ( Cemig D ) bought supply totaling MW average for the period January through June 2015, and Cemig Generation and transmission ( Cemig D ) sold 300 MW average. The low levels of reservoirs kept the thermal plants operating at the base of the system, generating electricity that was more expensive. The distributors had to buy electricity supply in the spot market, where the price is also higher. Since there was a substantial increase in the cost of generating electricity in the year, Aneel approved an increase, as from March, in the extra rate for the tariff flag bands a new system already in place since January 1. The extra rate for the red flag tariff was increased by 83.33% from R$ 3.00 to R$ 5.50 per 100 kwh used; and for the yellow flag rate, the extra was increased by 66.66%, from R$ 1.50 to R$ Together with the new values for the flag tariff additions, higher prices for electricity to the consumer, decided by the Extraordinary Tariff Review, came into effect in March. The review was approved by Aneel to cover the higher costs of generation of electricity that the distributors were unable to support, until the next adjustment scheduled for each one of them. The average increase in the price of electricity was 23.4%. Due to all these tariff adjustments referred to above, total electricity consumption in 1Q15 was lower by 1.8% than in first quarter 2014.

7 Cemig stock prices Security Ticker Currency Close of March 31, 2015 Close of March 31, 2014 Change, % Cemig PN CMIG4 R$ % Cemig ON CMIG3 R$ ADR for Cemig PN CIG US$ ADR for Cemig ON CIG.C US$ Ibovespa Ibovespa - IEEX IEEX - Source: Economática % % % 51,150 48, % 27,504 26, % Trading in Cemig s preferred shares (CMIG4) totaled R$ 2.6 billion in the first quarter of At this level, Cemig continues to be one of the most liquid companies in the Brazilian electricity sector, and one of the most traded in the Brazilian capital markets. 6 On the New York Stock Exchange the volume traded in ADRs for Cemig s preferred shares (CIG) in 1Q15 was US$ 995 million: we see this as reflecting recognition by the investor market of Cemig as a global investment option. The São Paulo stock exchange (Bovespa) index (the Ibovespa ) was up 5.4% in the first quarter, closing March at 51,150 points. We see this positive performance as reflecting investors increasing optimism on the Brazilian financial market. Cemig s shares underperformed the Brazilian stock market s principal index. Our common stock (Cemig ON) was down 4.54% in the first quarter, and our preferred stock rose 0.2% in the quarter. Cemig s long-term ratings The leading risk rating agencies have maintained their long-term outlooks associated with their credit ratings for Cemig:

8 Brazilian ratings: Agency Cemig Cemig D: Cemig GT Note Rating Note Outlook Note Outlook Fitch AA(bra) Negative AA(bra) Negative AA(bra) Negative S&P BrAA+ Stable BrAA+ Stable BrAA+ Stable Moody s Aa2.br Negative Aa2.br Negative Aa2.br Negative Global Ratings 7 Agency Cemig Cemig D: Cemig GT Note Outlook Note Outlook Note Rating S&P BrBB+ Stable BrBB+ Stable BrBB+ Stable Moody s Ba1.br Negative Ba1.br Negative Ba1.br Negative Note: Fitch does not have global ratings, only national. Adoption of IFRS The results presented below are prepared in accordance with the new Brazilian accounting rules, which embody a process of harmonization between Brazilian accounting rules and IFRS (International Financial Reporting Standards).

9 PROFIT AND LOSS ACCOUNTS Consolidated R$ /31/ /31/2014 Change % REVENUE 5,849,279 4,710, OPERATIONAL COSTS Electricity purchased for resale (2,421,404) (1,628,716) Charges for use of national grid (241,389) (169,542) Personnel and managers (336,438) (294,781) Employees and managers profit shares (80,973) (57,807) Post-retirement liabilities (57,609) (52,979) 8.74 Materials (13,882) (15,073) (7.90) Raw materials and inputs for production of electricity (77,518) (37,490) Outsourced services (198,829) (189,440) 4.96 Depreciation and amortization (247,121) (182,033) Operational provisions (43,164) (4,783) Gas bought for resale (262,008) - - Infrastructure Construction Cost (233,573) (149,070) Others (128,221) (116,519) TOTAL COST (4,342,129) (2,898,233) Equity gain in subsidiaries 90, ,720 (21.47) Gain on the Aliança stockholding reorganization 734, Income before Financial revenue (expenses) and taxes 2,331,772 1,926, Financial revenues 290, , Financial expenses (563,752) (350,462) Pretax income 2,058,322 1,828, Current and deferred income tax and Social Contribution tax (573,695) (578,868) (0.89) NET INCOME FOR THE PERIOD 1,484,627 1,250, Non-recurring Gain on the Aliança stockholding reorganization (573,182) - - CVA and Other financial components in tariff adjustment - 88,176 - ADJUSTED NET INCOME FOR THE PERIOD 911,445 1,338,265 (31.89)

10 Cemig s electricity market The Cemig Group (1) sells electricity through its distribution company, Cemig Distribuição ( Cemig D ), its generation and transmission company Cemig Geração e Transmissão ( Cemig GT ), and other wholly-owned subsidiaries: Horizontes Energia, Termelétrica Ipatinga, Sá Carvalho, Termelétrica de Barreiro, Cemig PCH, Rosal Energia and Cemig Capim Branco Energia. The total for sales in Cemig s consolidated electricity market comprises sales to: 9 (I) Captive consumers in Cemig s concession area in the State of Minas Gerais; (II) Free Consumers in both the State of Minas Gerais and other States of Brazil, in the Free Market (Ambiente de Contratação Livre, or ACL ); (III) other agents of the electricity sector traders, generators and independent power producers, also in the ACL; (IV) Distributors, in the Regulated Market (Ambiente de Contratação Regulada, or ACR ); and (V) the wholesale trading chamber (Câmara de Comercialização de Energia Elétrica, or CCEE) eliminating transactions between companies of the Cemig Group. Sales of electricity to final consumers totaled 11,746 GWh (including Cemig s own consumption), or 1.82% less than in 1Q14. This chart shows the breakdown of sales to final consumers of the Cemig Group in the quarter, by consumer category: Residential Industrial 7% 1Q 15 7% 22% 6% 1Q 14 7% 22% Commercial, services and others 14% 14% Rural Other 50% 51%

11 Total consumption of electricity (GWh) changes Q14 Residential Industrial Commercial Rural Other Wholesale 1Q15 The volume of electricity sold to final consumers of Cemig in 1Q15 was stable (down only 0.28%) in relation to 1Q14. Consolidated MWh 03/31/ /31/2014 Change, % Average price 03/31/2015 R$ Average price 03/31/2014 R$ Residential 2,563,143 2,567,781 (0.18) Industrial 5,816,894 6,110,066 (4.80) Commercial, Services and Others 1,696,604 1,662, Rural 794, , Public authorities 217, ,672 (1.40) Public lighting 331, , Public service 316, ,227 (0.89) Subtotal 11,736,387 11,953,669 (1.82) Own consumption 9,819 9, Wholesale supply to agents in Free and Regulated Markets ( * ) 4,035,551 3,863, Total 15,781,757 15,826,608 (0.28) (*) Includes Regulated Market Electricity Sale Contracts (CCEARs) and bilateral contracts with other agents. 10 Comments on the variations in consumption of each consumer category: Residential: The residential consumer category accounted for 16.24% of Cemig s electricity sales in 1Q14, totaling 2,563 GWh stable vis-à-vis 1Q14. Factors in this figure were: a. calendar effects - with a lower number of billing days in 1Q15 (91.8 days), than in 1Q14 (93.5 days); and b. Lower temperatures in 1Q15 than 1Q14, resulting in less use by consumers of air conditioners and ventilators in their homes;

12 c. Average monthly consumption per consumer 2.1% higher in 2014, at kwh/month in 1Q15, compared to kwh/month in 1Q14. Industrial: Mar. 31, 2015 MWh Mar. 31, 2014 Change, % Average price Mar. 31, 2015 R$ Average price Mar. 31, 2014 R$ Cemig GT (Generation and Transmission) 4,690,533 4,887,863 (4.04) Cemig D 951, ,840 (2.97) Other subsidiaries 174, ,363 (27.63) Total 5,816,894 6,110,066 (4.80) Electricity used by captive clients and electricity transported for Free Clients comprised 36.86% of the electricity distributed, and totaled 5,817 GWh in 1Q15, which was 4.8% less than in 1Q14. Consumption by industrial consumers tends to reflect the Brazilian and international macroeconomic context which in this quarter could be summarized as: Retraction of domestic demand, accumulation of inventories, fall in installed capacity utilization in various sectors, loss of competitiveness, reduction in entrepreneurs and consumers confidence, and low level of investments; and reduction of external demand, with reduction in exports due to the low international commodity prices. Commercial consumers: MWh Average price Average price Mar. 31, Mar. 31, Change, % Mar. 31, 2015 Mar. 31, R$ R$ Cemig GT (Generation and Transmission) 90,701 79, Cemig D 1,595,777 1,572, Other subsidiaries 10,126 10,268 (1.38) Total 1,696,604 1,662, The commercial consumer category accounted for 10.75% of Cemig s electricity sales in 2014, totaling 1,697 GWh in the quarter this was 2.05% higher than in 1Q14, reflecting the higher number of consumers billed.

13 Rural: Consumption by rural consumers, totaling 795 GWh, or 5.04% of the total electricity transacted by Cemig, was 6.86% higher than in 1Q14. We associate this higher consumption with a conjunction of climate factors: a. Lower rainfall in 1Q15 than in 1Q14, and b. consumption for irrigation 14.7% higher than in 1Q14. Other consumer categories: Total consumption by the other consumer categories Public Authorities, Public Illumination, Public Services, and Cemig s own consumption was 5.54% of the total electricity transacted, and was stable (down only 0.52%) compared to 1Q Wholesale supply to agents in the Free and Regulated Markets Sales to other agents of the electricity sector in the Regulated Market were 25.57% of the total volume transacted by Cemig in 1Q15, and 4.46% higher than in 1Q14. The average price of electricity sold was R$ /MWh in 1Q15, compared to R$ /MWh in 2014 I.e % higher year-on-year, reflecting the higher cost of electricity throughout the system. The electricity market of Cemig D The concession area of Cemig D (Cemig Distribution Cemig Distribuição S.A.), approximately 97% of the Brazilian state of Minas Gerais, totals an area of 567,478 km². Cemig D has four electricity concessions in the state, under four separate concession contracts (West, East, South, and North). Electricity billed to captive clients and electricity transported for Free Clients and distributors with access to Cemig D s networks totaled 10,999 GWh in 1Q14. This was 1.9% less than in 1Q14, reflecting: (I) growth of 0.5% in the captive market, and (ii)

14 reduction of 9.6% in use of the network by Free Clients reflecting the weak performance of the Brazilian economy, with reduction of demand for goods and services, greater selectivity in granting of financings, and the rate of recovery of the international economy. A total of 7,968,902 consumers were billed in March 2015 or 1.6% more than in March Of these, 422 are free clients that use the distribution network of Cemig D. 13 The company holds the concession for commercial operation of its activities for 20 years, up to February 18, 2016, and qualifies as subject to the terms of Provisional Measure 579/2012 (converted into Law in January 2013). On October 15, 2012 the Company requested extension of the related concession contract. On January 17, 2014 the National Electricity Agency, Aneel, sent to the Company Official Circular Letter 01/2014-DR/ANEEL stating that it was analyzing the request for extension of the concession, and that the final decision on the request rested with the Concessiongranting power. As of today s date, the terms of the extension are not known to the Company s Management. It is management s expectation that the Concession Grantor will grant this request for extension, on terms similar to the present ones, and for a period of 30 years. The electricity market of Cemig GT The market of Cemig GT comprises sales made: (I) (II) (III) (IV) in the Free Market (Ambiente de Contratação Livre or ACL) to Free Clients, either located in Minas Gerais or in other States; to other generation companies, traders and independent power producers; in the Regulated Market (ACR), to distributors; and through the Electricity Trading Chamber (CCEE). Total electricity billed by Cemig GT in 1Q15 was 10,613 GWh, 1.0% less than in 2014.

15 The number of clients billed by Cemig GT grew by 4.1%, from the end of March 2014 to 532, comprising: 482 industrial and commercial clients, in Minas Gerais and other states, 44 distribution companies, and 6 companies in the category of traders, generators and independent power producers. Free clients consumed 4,781 GWh in 1Q15, or 45.0% of the total electricity provided by Cemig GT, and 3.8% less than in 1Q14 on the following main factors: termination of contracts with clients at the end of 2014, which were not renewed by Cemig GT. reduction of consumption by clients due to the weak performance of the Brazilian economy, with lower domestic demand for goods and services, and also the effect of the rate of recovery in the international economy; and 14 addition of new clients in the Commercial category for Cemig GT, mainly outside the state of Minas Gerais. Sales in the Free Market to other agents in the sector totaled 2,520 GWh, which was 30.1% more than in 1Q14. The increase reflects signature of new contracts for sales of electricity to traders. Sales in the Regulated Market were 18.6% lower year-on-year, reflecting the ending of contracts made at the Free Market auction held by Aneel in 2011, which were contracts between Cemig GT and distributors for supply over the period 2012 end of Sales in the CCEE in 1Q15 were 7.3% lower than in 1Q14. Cemig GT had a seasonal effect in the first quarter, and sold supply in the 18th Adjustment Auction at prices close to the maximum spot price, mitigating the effect of the GSF (generation scaling factor), which averaged 0.79 in 1Q15, compared to 0.96 in 1Q14.

16 Physical totals of transport and distribution MWh MWh Change, 03/31/ /31/2014 % Total energy carried Electricity transported for distributors 87,127 75, Electricity transported for free clients 3,836,600 4,304,893 (10.88) Own load Consumption by captive market 6,780,163 6,744, Losses in distribution network 1,363,532 1,439,086 (5.25) 15 QUALITY INDICATORS SAIDI AND SAIFI Cemig is continuously taking action to improve operational management, organization of the logistics of its emergency services, and its permanent regime of preventive inspection and maintenance of substations, lines and distribution networks. It also invests in training of its staff for improved qualification, state-of-the-art technologies and standardizations of work processes, aiming to uphold the quality of electricity supply, and, consequently, maintain the satisfaction of clients and consumers. The charts below show Cemig s SAIDI (in hours) and SAIFI (in number of outages) for the last 2 years. These results reflect the investments made by the company in preventive maintenance, such as cleaning of power line pathways, tree pruning, replacement of cross-arms, maintenance of structures, replacement of poles, transformers and cables, and other work such as network shielding, and overhaul and interconnection of circuits. Another important initiative is the change of the technological level, with systematic investment in automation of the electricity system, which will enable automatic remote re-establishment of supply after outages.

17 14,0 SAIDI System Average Interruption Duration Index 12,0 10,0 8,0 6,0 4,0 2,0 - JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Target 10,0 SAIDI System Average Interruption Frequency Index ( / Consumer ) 8,0 6,0 4,0 16 2,0 - JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Target Consolidated operational revenue Revenue from supply of electricity: Total revenue from supply of electricity to final consumers in 1Q15 was R$ 5,139 million, an increase of 27.69% from 1Q14 (R$ 4,025 million). Final consumers Total revenue from electricity sold to final consumers, excluding Cemig s own consumption, in 1Q15 was R$ 4,292 million this was 23.37% more than the figure for 1Q15, of R$ 3,479 million. The main factors affecting revenue in 1Q15 were: Extraordinary tariff adjustment, with average effect on consumer tariffs of 28.76%, effective from March 2, 2015.

18 Annual Tariff increase for Cemig D, with average effect on tariffs for captive consumers of 14.76%, in effect from April 8, Institution of the mechanism of flag tariff bands, starting in January 2015, at the rate of R$ 1.50 for the yellow band and R$ 3.00 for the red band, and as from March 2015, R$ 2.50 for the yellow band and R$ 5.50 for the red band - all of these applying per 100 kwh consumed. The red band was in effect in the first three months of R$ 03/31/ /31/2014 Change, % Average price 03/31/2015 R$ Average price 03/31/2014 R$ Change, % Residential 1,546,762 1,217, Industrial 1,285,151 1,108, Commercial, Services and Others 846, , Rural 254, , Public authorities 105,804 84, Public lighting 100,151 80, Public service 108,826 84, Subtotal 4,247,675 3,414, Supply not yet invoiced, net 44,055 64,084 (31.25) Wholesale supply to other concession holders (*) 847, , Supply not yet invoiced, net Total 5,139,029 4,024, (*) This includes Regulated Market Electricity Sale Contracts (CCEARs) and bilateral contracts with other agents. Revenue from Use of Distribution Systems (the TUSD charge) Cemig D s revenue from the TUSD was R$ 210 mn in 1Q15, 7.23% more than in 1Q14 (R$ 196 mn). This is mainly due to the tariff increase of 8.79% coming into effect on April 8, Revenue from transactions in the Electricity Trading Chamber (CCEE) Revenue from transactions in electricity on the CCEE in 1Q15 was R$ 1,010,932, or 23.81% less than in 1Q14 (R$ 1,326,907). The change reflects the average Spot Price (Preço de Liquidação de Diferenças, or PLD) being 42.00% lower in the year, at R$ /MWh, compared to R$ /MWh in 2014). On the other hand, the Company had more supply available for settlement in the wholesale market in 2015, which partially offset the effect of lower in average selling prices.

19 CVA and Other financial components in tariff calculations Due to the alteration in the concession contracts of the distributors, Cemig started to recognize balances of non-controllable costs to be passed through to Cemig D s next tariff adjustment, resulting in a revenue item of R$ 550 million in 1Q15. Revenue from supply of gas In 1Q15 the Company had revenue of R$ 426 mn from supply of gas, which is included due to the consolidation of Gasmig as from October Taxes and charges applied to Revenue The sector charges that are effectively deductions from reported revenue totaled R$ billion in 1Q15, 56.97% more than in 1Q14. This result is, principally, due to the increase in the Energy Development Account (CDE) and the increase in charges under the flag tariff bands. 18 The charges for the CDE were R$ 298 mn in 1Q15, compared to R$ 42 mn in The expenses included are: concession indemnities, tariff subsidies, subsidy for balanced tariff reduction, and low-income consumers, and coal, and the Fuel Consumption Account (CCC). In 2014 certain expenses were not considered in full in the decision of the amounts of the CDE, which resulted in a deficit in the year. A new budget for the CDE was made in 2015, increasing the annual amount from R$ 194 mn to R$ bn (under Aneel Resolution 1857/2015), this amount being passed through to tariffs in the component for sector charges. The other deductions from revenue are taxes, calculated as a percentage of amounts invoiced. Thus their variations are, substantially, proportional to the changes in revenue. Operational costs and expenses Operational costs and expenses, excluding Financial revenue (expenses), totaled R$ billion in 1Q15, 49.82% more than in 1Q14 (R$ billion).

20 6% 6% 3% 5% 8% 8% 2% 2% 4% 56% Personnel Employees and managers profit shares Raw materials and inputs for electricity production Outsourced services Electricity bought for resale Depreciation and amortization Charges for use of national grid Gas purchased for resale Infrastructure construction costs Other operational expenses, net 19 The following paragraphs comment on the main variations: Electricity purchased for resale The expense on electricity bought for resale in 1Q15 was R$ billion, which compares to R$ billion in 1Q14, an increase of 48.67%. Main factors in this increase were: Cemig D Expense on electricity acquired in auctions 87.20% higher, at R$ billion, in 1Q15, compared to R$ 619 million in 1Q14, arising from availability contracts, due to expenditure on fuel for generation by the thermal plants. Increase of 80.64% in the expense on energy provided by Itaipu Binacional which is indexed to the dollar, and was R$ 367 mn in 1Q15, compared to R$ 205 mn in 1Q14. The change in fact arises principally from the increase in the tariff, which was US $26.05/kW-month in 2014, and increased to US $38.07/kW-month in January Also, the dollar appreciated against the Real from 1Q14 to 1Q15. The average US$ dollar exchange rate used in invoices from Itaipu in 1Q15 was R$ 2.91/US$, % higher than in 1Q14 (R$ 2.34/US$).

21 Cemig GT: The expense on electricity bought for resale in 1Q15 was R$ 608 million, which compares to R$ 356 million in 1Q14, an increase of 70.87%. This mainly reflects volume of electricity purchased 61.16% higher in 1Q15 (at 3,670 GWh) than in 1Q14 (2,277 GWh), due to a higher volume of trading activity, and a higher acquisition cost, due to the higher price of electricity in the Brazilian market. Gas bought for resale The expense on Gas purchased for resale was R$262 mn in 1Q15. This expense did not exist in 2014, since Gasmig began to be consolidated only as from October 2014, when Cemig acquired the 40% interest in the company owned by Petrobras. 20 Personnel (excluding (a) voluntary retirement programs and (b) costs of personnel transferred to works in progress) 03/31/ /31/2014 Δ % Remuneration and salary-related charges and expenses 295, , Supplementary pension contributions Defined-contribution plan 19,006 17, Assistance benefits 34,635 33, , , The total expense on personnel (excluding voluntary retirement programs and costs of personnel transferred to works in progress) was 11.96% higher than in 1Q14. This increase mainly reflects the 6.34% increase in salaries given in November 2014 (under the Collective Agreement), and also the result of the court decision on the disputed increase (taken to court by entities representing the employees), which ordered a salary adjustment of 3% as from March The total number of employees was 0.29% lower, at 7,888, on March 31, 2015 than at the end of March 2014 (7,911).

22 Number of employees H GT D 6,041 6,084 6,067 6,073 6,040 1,671 1,721 1,712 1,701 1, Q14 2Q14 3Q14 4Q14 1Q15 Raw materials and inputs for production of electricity The expense on Raw materials was R$ 78 mn in 1Q15, compared to R$ 37 mn in 1Q14, an increase of %. This variation arises mainly from the increase in prices of fuel and freight, and a higher volume purchased in Depreciation The expense on depreciation was R$ 247 mn in 1Q15, 35.76% more than in 1Q14 (R$ 182 mn). This arises mainly from the following items: In 2014 Cemig GT posted a positive (credit) adjustment of R$ 21 mn for review of the expenses recorded in prior periods, reducing the expense on depreciation in that period. In 2015 the fair value of Gasmig was realized, with an effect of R$ 13 mn on the consolidated depreciation expense. Equity gain (loss) in subsidiaries The total effect of Equity holdings in subsidiaries in 1Q15 was a gain of R$ 90 million, or 21.47% less than the gain of R$ 115 million in 1Q14.

23 This reduction arises mainly from the consolidation of Gasmig as from October 2014, and from a lower result in the subsidiary Light in 1Q15 than in 1Q14. Gain on fair value in a stockholding reorganization In 2015 the Company posted a gain of R$ 734 mn reflecting the valuation at fair value of the assets of Aliança Geração de Energia. On February 27, 2015, the transaction of association between Vale S.A. and Cemig GT by subscription of shares in Aliança Geração de Energia S.A. was completed. The two companies subscribed their shares in Aliança by transfer to it of the following equity interests they held in the following electricity generation assets: Porto Estrela, Igarapava, Funil, Capim Branco I, Capim Branco II, Aimorés and Candonga. As a result of the Association Aliança now has installed hydroelectric generation capacity of 1,158 MW in operation (assured offtake level 652 MW), as well as other generation projects. 22 With the constitution of Aliança, Vale and Cemig GT hold, respectively, 55% and 45% of the total capital, and exercise control jointly. The conclusion of the transaction does not involve any financial disbursement: both companies subscribed assets. In accordance with the accounting rules adopted in Brazil, specifically, CPC 18 R2 (Investment in affiliates, subsidiaries, or jointly-controlled enterprises), Cemig GT must recognize in its financial statements the gain relating to fair value valuation of the investment in Aliança, up to the limit of the interest of Vale.

24 FINANCIAL REVENUE (EXPENSES) Financial revenues Financial expenses 7% 13% Income from cash investments 7% 6% 52% Costs of loans and financings 32% 7% 16% Invoice arrears fees Monetary updating Monetary updating of CVA Updating of financial assets 24% FX Variations Monetary updating on loans and financings Costs and Monetary updating of post-retirement obligations 25% Other 11% Other 23 Cemig reports net financial expenses of R$ 273 million in 1Q15, compared to net financial expenses of R$ 98 million in 1Q14. The main factors are: Lower revenue from updating of the Remuneration Base of Assets (BRR), the amount in 1Q15 being R$ 92 mn, compared to R$ 113 mn in 1Q14: the lower figure basically reflects the lower IGP-M index in the period (2.03% in 1Q15, vs. 2.55% in 1Q14); higher expense on foreign exchange variation on loans and financings, and Itaipu Binacional, at R$ 61 mn in 1Q15, compared to $ 4 mn in 1Q14: This mainly reflects the higher variation in the dollar exchange rate in the two periods (the dollar appreciated by 20.77% against the Real in 1Q15, compared to a depreciation of 3.40% in 1Q14); and appreciation of the euro against the Real in 1Q15 (by 6.78%) vs. depreciation of 3.38% in Recognition, as from 2015, of FX and monetary variation on the balances of the CVA and the Other financial components items that are taken into account in tariff increases: this represented an increase of R$ 74 mn in financial revenues in 1Q15. Charges for loans and financings 71.32% higher, at R$ 293 mn, in 1Q15, compared to R$ 171 mn in 1Q14. This is mainly due to a higher debt indexed to the CDI rate, and the higher variation represented by the CDI rate in the quarter: 2.81% in 1Q15, vs. 2.40% in 1Q4;

25 Income tax and Social Contribution tax In 1Q15 Cemig reported income tax and the Social Contribution tax totaling R$ 573 million, on reported pre-tax profit of R$ billion, representing a percentage rate of 27.87%. In 1Q14, Cemig s expense on income tax and the Social Contribution totaled R$ 579 million, on pre-tax profit of R$ billion, a percentage of 31.65%. Regulatory assets and liabilities On November 25, 2014 Aneel decided to amend the concession contracts of holders of 24 Brazilian electricity distribution concessions, to provide that in the event of cancellation of the concession contract for whatever reason, the remaining balances (assets and liabilities) of any shortfall in payment or reimbursement through the mechanism of the tariff will be taken into account by the Concession-granting power for the purposes of indemnity. The balance on the Account of CVA (Compensation for Variation of Portion A items) in tariff adjustments and for Neutrality of Sector Charges refers to the positive and negative differences between the estimate of the Company s non-manageable costs and the payments actually made. The variations found are the subject of monetary updating based on the Selic Rate and compensated in the subsequent tariff adjustments. The movement in these financial assets and liabilities was as follows:

26 Balance at Dec. 31, 2014 New provisions (*) Amortization Monetary updating Balance at March 31, 2015 Assets Quota for the Energy Development Account (CDE) 12, ,019-1, ,206 Tariff for use of transmission facilities of grid participants 94,683 66,818 (14,704) 4, ,540 Tariff for transport of electricity provided by Itaipu 2, (169) 64 3,151 Program to encourage alternative sources of electricity Proinfa 2,361 - (2,371) 10 - System Service Charges (ESS) and Reserve Energy Charge (EER) 3,333 2,432 (3,333) 45 2,477 Electricity purchased for resale 2,063, ,246 (297,092) 58,828 2,319,637 Overcontracting of supply 211,471 (109,096) (4,945) 1,647 99,077 Other 35,372 39,077 (29,995) ,897 Total assets 2,426, ,471 (352,609) 67,047 2,833, Liabilities System Service Charges (ESS) and Reserve Energy Charge (EER) (310,161) (92,307) 19,209 (10,319) (393,578) Electricity purchased for resale (994,461) (103,303) 235,195 (27,472) (890,041) Neutrality of Portion A (10,983) 4,666 3,911 6 (2,400) Overcontracting - (181,953) - 11,335 (170,618) The Tariff Flag system - (127,114) - - (127,114) Other (3,796) (4,842) 2,267 (111) (6,482) Total liabilities (1,319,401) (504,853) 260,582 (26,561) (1,590,233) Total Net assets presented in Statement of financial position 1,106, ,618 (92,027) 40,486 1,243,752 * This provision comprises the foreign exchange variation on the invoices from Itaipu. The balance of this provision is given net of the amount received under the ACR account. Ebitda Consolidated Ebitda was higher by a considerable percentage, of 22.31%, mainly due to the accounting gain for the Fair valuation on conclusion of the stockholding transaction to constitute Aliança Geração de Energia as follows: Ebitda - R$ /31/ /31/2014 Change % Profit (loss) for the period 1,484,627 1,250, Income tax and Social Contribution tax 573, ,868 (0.89) + Net financial revenue (expenses) 273,450 97, Depreciation and amortization 247, , = EBITDA 2,578,893 2,108,

27 Cemig Consolidated % 60% 40% 20% - 1Q14 1Q15 0% Ebitda, R$ bn Ebitda margin, % Cemig GT Cemig D % % % 60% 40% % 5% % Q14 1Q15 0% 0 1Q14 1Q15 0% Ebitda, R$ bn Ebitda margin, % Ebitda, R$ mn Ebitda margin, % DEBT Debt, by indexor 2% 2% 29% Debt, by Company 3% IPCA D CDI URTJ/TJLP UFIR/RGR 50% 47% GT Others 67% Cemig s consolidated total debt at March 31, 2015 was R$ bn, 3.35% lower than at December 31, 2014.

28 5,000 4,000 4,610 Debt amortization timetable R$ mn 3,000 2,000 1,000 2,133 1,809 1, , After Debt - with IFRS 10 R$ mn Debt - without IFRS 10 R$ mn 13,509 13,056 21,495 20,218 12/31/ /31/ /31/ /31/2015 Net debt with IFRS 10 (R$ mn) 11,610 11,982 Net debt without IFRS 10 (R$ mn) 18,047 18,331 12/31/ /31/ /31/ /31/2015

29 Debt of Cemig GT R$ mn Debt of Cemig D R$ mn 7,037 6,574 6,069 6, DIVIDENDS 28 Cemig s dividend policy is that 50% of the net income will be distributed as obligatory dividend to stockholders, subject to the other provisions of the by-laws, and the applicable legislation; and the balance, after any retention specified in a capital and/or investment budget prepared by Cemig s management, which complies with the Longterm Strategic Plan and the dividend policy stated in it, and has been duly approved, will be applied to constitute a profit reserve to be used for distribution of extraordinary dividends, up to the maximum limit specified by law. The General Meeting of Stockholders held on April 30, 2015 approved a proposal by the Board of Directors that, of the NET INCOME for 2014, which totals R$ billion, the amount of R$ 797 million, equal to 25% of the NET INCOME for 2014, should be paid in dividends. In the proposal by the Board of Directors, it was noted that the payment of dividends specified in the by-laws, of 50% of the NET INCOME for the business year, would not be compatible with the present financial situation of the Company, due mainly to the low level of water in the electricity reservoirs, which could lead to a significant reduction in the energy available for sale by the Company s hydroelectric plants, affecting the Company s revenues and cash position.

30 Thus Management stated in its Proposal that it believed it to be more prudent, at the present moment, not to allocate a part of the minimum obligatory dividend, as calculated, for payment in the 2015 business year, until a fuller analysis can be made of the Brazilian macroeconomic scenario and the outlook for the electricity sector this year and its effects on the Company s cash flow. The amounts not distributed as obligatory dividends, corresponding to 25% of the NET INCOME for the business year 2014, in the amount of R$ 797 mn will be held in Stockholders equity in the Reserve for obligatory dividends not distributed, to be paid 29 as soon as the Company s financial situation permits, in accordance with Paragraph 5 of Article 202 of the Corporate Law. The table below shows the history of our distribution of stockholder corporate action payments over the last five years. Date approved Type Amount per share (R$) 04/30/2015 Dividends /26/2014 Interest on Equity /07/2014 Extraordinary dividend /27/2014 Extraordinary dividend /30/2014 Dividends /05/2013 Interest on Equity /30/2013 Dividends /20/2012 Interest on Equity /20/2012 Extraordinary dividend /27/2012 Dividends 1.90 Cemig s dividend yield, shown below, illustrates the Company s commitment to seek business strategies that ensure an adequate return for stockholders.

31 Dividend Yield (%) 22.0% 23.5% 10.4% 12.4% 9.2% 3.4% /31/ THE GROUP S PORTFOLIO OF GENERATION ASSETS Stage Cemig - generation asset portfolio, in MW* Hydroelectric plants Small hydro plants Wind farms Solar plants Thermal plants In operation 7, ,831 Under construction / 1, ,360 contracted Total 8, ,191 *The amounts shown refer only to Cemig s direct or indirect stake on March 31, Total Highlights of 1st quarter 2015: 2011 A-3 LEN Auction On March 4, 2015, four wind farms, of the total of nine for which supply was contracted in the 2011 A-3 LEN Auction, began commercial operation. The wind farms Ametista, Dourados, Maron and Pilões have total installed capacity of MW and are owned by Renova Energia, in which Cemig has a direct and indirect total stake of 32.5%. Aliança On February 27, 2015 the transaction between Vale S.A. and Cemig GT was concluded for subscription of generation assets of both companies into Aliança Geração de Energia S.A. ( Aliança Geração ). The transaction is related to the agreement signed between Vale and Cemig GT on December 19, 2013.

32 After obtaining all the regulatory approvals and compliance with the related conditions, Vale and Cemig GT increased the share capital of Aliança Geração by subscribing generation assets to the company, maintaining their respective equity interests in it at 55% and 45% respectively. The conclusion of the transaction does not involve any financial disbursement: both companies subscribe assets. The result is that Aliança Geração now holds the equity interests previously held by Vale and Cemig GT in the following generation assets: Igarapava, Porto Estrela, Funil, Aimorés, Amador Aguiar I and II, and Candonga. These generation plants have an aggregate installed capacity of 1,158 MW, with physical guarantee offtake level of 652 MW average. 31 Aliança Norte On March 31, 2015, after obtaining of the legal approvals and compliance with the conditions precedent, Vale transferred its holding of 9% in Norte Energia S.A., the company which is building and will operate the Belo Monte Hydroelectric Plant, to its subsidiary Aliança Norte Energia Participações S.A. (Aliança Norte). In an immediately subsequent transaction Cemig GT acquired 49% of the shares of Aliança Norte, corresponding to an indirect equity interest of 4.41% in Norte Energia S.A. The acquisition was made for payment in cash of approximately R$ 305 mn.

33 FINANCIAL STATEMENTS SEPARATED BY COMPANY AND BY OPERATIONAL SEGMENT Financial Statements separeted by Company: March 31, 2015 R$ 000 HOLDING GT D GASMIG TELECOM SÁ CARVALHO ROSAL OTHER SUBSIDIARIES ELIMINATIONS / TRANSFERS TOTAL, SUBSIDIARIES TAESA LIGHT MADEIRA ALIANÇA GERAÇÃO OTHER JOINTLY- CONTROLLED SUBSIDIARIES ELIMINATIONS / TRANSFERS TOTAL SUBSIDIARIES AND JOINTLY-CONTROLLED SUBSIDIARIES Assets 15,137,515 13,477,219 14,384,499 1,993, , , , ,058 (9,556,427) 36,383,260 4,819,998 4,787,621 2,309,376 1,013,783 4,190,187 (7,322,226) 46,181,999 Cash and cash equivalents 29, , ,713 70,144 10,536 7,219 5,191 33, , , ,344 27,879 5, ,347-1,580,847 Accounts receivable Securities cash investments Taxes Other assets Investments / PP&E / Intangible / Financial Assets of Concession - 1,362,331 2,098, ,104-5,775 6,741 (1,749) (37,249) 3,552, , ,460 29,480 27,806 65,611 (14,189) 4,438,023 7, ,650 2,203 79, ,358 21,584 91, ,671 (203,896) , , , ,487 1,512,923 87,539 26, ,304, , ,844 11,385 1,673 14,376-2,966, , ,130 1,614, ,539 28,477 3, ,141 (315,630) 2,928, , , ,878 9, , ,563 4,633,253 13,746,203 11,163,005 8,846,423 1,317, , , , ,594 (9,203,548) 26,524,425 4,012,838 2,637,441 2,122, ,178 3,729,645 (7,738,600) 32,257,681 - LIABILITIES 15,137,515 13,477,219 14,384,499 1,993, , , , ,058 (9,556,427) 36,383,260 4,819,998 4,787,621 2,309,376 1,013,783 4,190,187 (7,322,226) 46,181,999 Suppliers and supplies 5, ,436 1,122,677 82,829 11,494 6, ,024 (43,889) 1,488,401 18, ,209 80,921 12,576 67,338 (15,801) 2,115,299 Loans, financings and debentures Interest on Equity, and dividends Post-retirement liabilities Taxes Other liabilities Stockholders equity - 6,574,472 6,069, ,064 42, ,055,825 2,072,708 2,309,133 1,352,794 1,408 1,425,997-20,217,865 1,617,138 14, ,955 34,603-18,017 19,900 2,161 (304,068) 1,617, , ,680 (77,824) 1,617, , ,583 1,940, ,677,811-10, ,688,244 20, ,339 1,506, ,579 9,106 37,462 2,189 24,146-2,698, , ,050 33,814 3,063 27,728-3,935, , , , ,384 46, ,852 (5,181) 2,062,202 98, , , ,938 21,804 63,672 2,824,896 12,778,817 4,937,449 2,587, , , , , ,871 (9,203,289) 12,783,003 1,904,850 1,220, , ,798 2,620,640 (7,292,273) 12,783,003 Attributed to interest of controlling stockholders 12,778,817 4,937,449 2,587, , , , , ,871 (9,203,289) 12,778,817 1,904,850 1,220, , ,798 2,620,640 (7,292,273) 12,778,817 Interest of non-controlling stockholder NET INCOME Net operational revenue Operational costs and expenses , , , ,403,101 3,064, ,127 29,857 14,520 14,934 54,447 (73,470) 5,849, , ,369 69,429 25,660 90,772 (54,445) 6,996,292 (34,614) (1,014,907) (2,983,544) (298,914) (24,997) (9,853) (2,394) (18,487) 45,581 (4,342,129) (25,129) (693,005) (57,230) (15,866) (65,826) 22,424 (5,176,761) 32 CEMI Electricity purchased for resale - (607,782) (1,837,924) - - (7,462) 495 (9,709) 40,978 (2,421,404) - (513,095) (22,825) (6,203) (12,016) 35,267 (2,940,276) Charges for the use of the national grid - (72,218) (195,207) (743) (511) 27,290 (241,389) - - (12,562) (1,400) (3,213) 14,296 (244,268) Gas bought for resale Construction cost Personnel Employee profit shares Post-retirement liabilities Materials Outsourced services Depreciation and amortization Operational provisions Other expenses, net Operational profit before Equity gains (losses) and Financial revenue (expenses) Equity loss in subsidiaries Gain on Aliança stockholding reorganization Financial revenue Financial expenses (262,008) (262,008) (262,008) - (30,933) (202,640) (233,573) (1,742) (61,405) - - (1,007) - (297,727) (13,187) (83,474) (228,260) (5,822) (3,677) (328) (273) (1,417) - (336,438) (10,804) (30,382) (1,595) (1,549) (13,599) - (394,367) (4,250) (14,610) (61,622) - (374) (80) (36) (1) - (80,973) (1,544) - - (273) (43) - (82,833) (3,196) (12,638) (41,774) (1) - (57,609) (57,609) (90) (80,868) (9,814) (319) (24) (87) (88) (110) - (91,400) (3,907) 899 (394) (73) (766) - (95,641) (1,842) (32,101) (156,942) (1,151) (6,451) (438) (582) (3,880) 4,558 (198,829) (5,345) (38,428) (2,057) (1,998) (12,125) 222 (258,560) (116) (76,002) (111,671) (23,811) (9,258) (1,373) (1,098) (2,796) (20,996) (247,121) (178) (36,553) (11,483) (3,200) (18,187) (19,387) (336,109) (7,988) 5,131 (40,153) - (153) - - (1) - (43,164) - (3,318) (46,482) (3,945) (9,412) (97,537) (5,803) (5,060) (85) (69) (61) (6,249) (128,221) (1,609) (10,723) (6,314) (1,170) (4,870) (7,974) (160,881) (34,534) 1,388,194 81,139 42,213 4,860 4,667 12,540 35,960 (27,889) 1,507, , ,364 12,199 9,794 24,946 (32,021) 1,819,531 1,499,761 (37,293) - - (6,679) - - 1,342 (1,367,039) 90, (4,310) ,513 (112,543) (5,049) - 734, , ,530 5,954 28, ,709 7, , ,302 92, ,223 2, , ,494 (1,982) (240,474) (307,217) (12,046) (1,496) (66) (36) (435) - (563,752) (160,523) (170,042) (28,196) (53) (29,305) - (951,871) Profit before income tax and Social Contribution tax 1,469,199 1,873,087 16,631 37,754 (2,667) 5,250 13,126 40,870 (1,394,928) 2,058, ,542 66,235 (13,162) 9,756 24,506 (144,564) 2,102,635 Income tax and Social Contribution tax 15,283 (559,958) (11,335) (4,093) (1,325) (1,509) (705) (10,053) - (573,695) (13,985) (24,476) (961) (854) (4,037) - (618,008) Net Income for the period 1,484,482 1,313,129 5,296 33,661 (3,992) 3,741 12,421 30,817 (1,395,072) 1,484,627 87,557 41,759 (14,123) 8,902 20,469 (144,564) 1,484,627 Interest of controlling stockholder 1,484,482 1,313,129 5,296 33,516 (3,992) 3,741 12,421 30,817 (1,395,072) 1,484,482 87,557 41,759 (14,123) 8,902 20,469 (144,564) 1,484,482 Interest of non-controlling stockholder ,484,482 1,313,129 5,296 33,661 (3,992) 3,741 12,421 30,817 (1,395,072) 1,484,627 87,557 41,759 (14,123) 8,902 20,469 (144,564) 1,484,627